The National Federation of Urban Cooperative Banks and Credit Societies (Nafcub), the apex body of the cooperative lending organizations has opposed the recommendations made by a Reserve Bank of India (RBI) panel suggesting conversion of these bodies into regular private banks.
At a well-attended press conference in which Directors R B Shandilya, Laxmi Das, O P Sharma, Mudit Verma and others participated Nafcub President M L Abyankar warned that this would amount to handing over the 100-year-old cooperative movement to private hands.
Talking about the glorious history of the urban cooperative bank movement Abhyankar said it was conceived as a solution to help the poor escape the clutches of money lenders. It came more than 100 years ago while the RBI was established by an act in 1935.
Abhyankar further said the Board as well as the General Body of NAFCUB have already passed a resolution rejecting the RBI’s Panel recommendations on the issue. The NAFCUB is disappointed by the fact that these recommendations contradict the 97th Constitutional amendment enshrining right to form a cooperative society as individual’s fundamental right.
On the question of no compulsions for UCBs to convert, Abhyankar said we have been demanding level playing field with our commercial cousins for many years as we are not allowed to operate in many fields such as infrastructure, IT and excise collection, issuance of bank guarantee- there are close to 15 operations in which UCBs are not allowed. Now when we want to grow they ask us to convert, Abhyankar lamented.
Nafcub Delhi chapter head Laxmi Dass who is also the chairman of Kangra Bank said UCBs are accountable to state govt, RBI and its members. We wish to obey the RBI norms and have been doing so in the past too but please allow us to grow with our cooperative character.
Subhas Gupta , the Chief Executive traced the history of urban cooperative movement in his introductory speech. O P Sharma , Chairman of Haryana State Urban Cooperative Bank Federation said we move in tandem with the govt on all issues be it jandhan or jan suraksha but the govt fails to see our role in the campaign for inclusive growth. Shandilya, the vice chairman parried questions from the reporters.
The general refrain in the conference was if cooperative banks will be converted into private sector banks, the cooperative movement would be harmed. The cooperative movement has been in existence since the time when there was neither private sector nor public sector nor the RBI.
Compared to commercial banks urban cooperative banks may be small but they are big in number. It is not there for doing any profitable business; it aims at improving the standard of living of the poor through inclusive growth.
NAFCUB has decided that every UCB will pass resolution against the report and submit the same to the RBI so that the recommendations are not implemented. Nafcub sees the RBI panel recommendations as ‘a policing act’ coming from the RBI.
The RBI committee headed by R Gandhi made the recommendations last month on the business size, conversion of UCBs and the issue of fresh licences, among others things. It has put the matter on its website and sought feedback till 18th of September.